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An attorney's ordinary compensation, or statutory fee, for representing a personal representative in a probate case is determined by the estate's value. Estate of Hilton (1996) 44 Cal.App.4th 890, 894-915. For example, if the estate is valued at $400,000, the attorney's ordinary compensation is $11,000. The multiplier is a percentage of the estate, i.e. 4% of the first $100,000, 3% of the next $100,000 and 2% of the next $800,000.
Ordinary compensation is payment for typical services rendered in a probate, e.g. appointment of the personal representative, preparation of the inventory and appraisal, payment of creditors, closing of the estate, etc. Extraordinary compensation can be awarded for certain services, e.g. selling estate property (quite common in probates involving real estate). Extraordinary compensation is based off the attorney's hourly rate.
If "there are two or more attorneys for the personal representative, the
attorney’s compensation shall be apportioned among the attorneys by the
court according to the services actually rendered by each attorney or as
agreed to by the attorneys." Probate Code
§
10814.
In a recent unpublished appellate decision, an attorney was not permitted to collect the full statutory fee because other attorneys had worked on the case, but did not request their portion of the statutory fee when probate concluded.
In this case, Attorney A had assisted with the appointment of the initial personal representative. Attorney A later sought leave to withdraw. Attorney B became counsel of record and "prepared and obtained the estate's Employer Identification Number,
prepared and filed forms with the Internal Revenue Service, researched
title to the estate's real property, and prepared and filed a "Final"
inventory and appraisal." Attorney B later filed a motion to be relieved as counsel. Attorney C then became counsel of record until probate was concluded.
Due to an unconventional method for closing the estate, Attorney A and Attorney C did not request a portion of the statutory fee. Instead, Attorney B claimed that he was entitled to the full fee. The trial court disagreed and awarded Attorney B 50% of the statutory fee. This was upheld on appeal.
Occasionally a probate client becomes disenchanted with his or her attorney, e.g. lack of responsiveness with the client or failure to file documents in a timely manner, and decides to switch attorneys mid-stream. A simple substitution of attorney form is all that is required to replace an attorney. At that point, the client can either proceed without an attorney, in propria persona as it is known, or they can hire substitute counsel. Typically the client will hire a new attorney given probate's complexities. If they hire new counsel who completes the probate process, a natural dilemma arises. How is the attorney fee apportioned between the old and new attorney?
The California Probate Code has a specific law that addresses the issue of apportionment. Probate Code
§
10814 states "if there are two or more
attorneys for the personal representative, the attorney’s compensation
shall be apportioned among the attorneys by the court according to the
services actually rendered by each attorney or as agreed to by the
attorneys." Consequently, a probate judge has discretion to apportion the fee between the probate attorneys. Estate of McManus (1963) 214 Cal.App.2d 390, 400.
The logical follow-up question is, how do you apportion the services rendered between the probate attorneys? This is most easily achieved through declarations stating each attorney's hourly rate and how many hours each expended on the case. Since the ordinary attorney fee for a probate case is set by statute, e.g. a $11,000 fee for a $400,000 estate, the apportionment is prone to approximations. For instance, the old attorney bills at $300 an hour and expends 30 hours on the case, a $9,000 fee. Conversely, the new attorney bills at $250 an hour and expends 20 hours on the case, a $5,000 fee. The probate judge could then decide to reasonably apportion the fee amongst the old and new probate attorneys.
From experience, it is much easier to open probate than to close probate. In order to close probate, a petition needs to be filed on pleading paper. Whereas to open probate, such usually only requires the completion of various judicial council forms (these are fill-in templates). Hence, the attorney that completes probate would normally have more work to complete than the attorney that begins it. This increased workload naturally results in a higher fee. Thus, one would expect the attorney that concludes probate to have the larger fee request.
Finally, there is only one fee given for an ordinary
attorney's fee. Cal Rules of Ct 7.704(a). Thus, even if multiple
attorneys work on the case, the ordinary attorney fee is not multiplied
by the number of attorneys who worked on it. Thereby a $11,000 ordinary attorney fee is not
doubled because two or more attorneys worked on the case. The $11,000 ordinary attorney fee is simply apportioned amongst the attorneys.
When a person passes away, his or her estate might require probate. Probate is commonly defined as the judicial process where a person's assets are collected, their debts paid and the balance distributed to their beneficiaries. The typical probate in California can range from 7-12 months depending on the county. The last two probates I handled took 10 months (Sacramento County) and 9 months (Santa Clara County). Unfortunately the California legislature has not placed a priority on the California judicial system and budget cuts have caused staff reductions and court closures which have severely affected timely probate administration. The attorney fees for probate are basically set by statute and are based off the value of the estate. See Probate Code § 10810. Attorneys seldom handle a probate for less than the statutory fee given the amount of work required to probate an estate.
The threshold figure for probating an estate is greater than $150,000 in California "probate assets." Rather than devote this post to what constitutes "probate assets" I will instead focus on a peculiar omission of the probate process.
One of the first questions I am asked by an executor is how many death certificates to order. The standard response is 10 death certificates. This answer is prompted by the fact that ordering death certificates can be a lengthy process unless the executor is willing to go to the county recorder in-person. So one errs on the side of caution.
Various entities require that a death certificate be presented to them in order to validate that the decedent has in fact passed away. For example, a bank will typically require that a death certificate be presented to prove that the account holder has passed away. Consequently, the account will be frozen or transferred, the bank will not let the account continue as is. However, I have noticed that banks and other entities have increasingly become agreeable to a copy of the death certificate. Hence, the executor does not have to give up one of those hypothetical 10 death certificates.
Very oddly though, there is no requirement that a death certificate be filed when probating an estate.
Judicial council form DE-111 is the form used to begin a California probate. Nowhere on the form does it require that a death certificate be attached to the petition. Form DE-111 simply asks for the date of death and the decedent's address at the time of death. Although form DE-111 does require the petitioner to sign a declaration under penalty of perjury that the contents of the petition are true and correct. Still, it is hard to believe that no death certificate is needed during probate given that it is a judicial process. From personal experience, out of the 4 probates I have handled in the past 2 years, at no point did the probate court ask for proof of the decedent's death. A simple filed statement that the decedent had passed away was sufficient.
The cost of probate is one of the main reasons why many individuals opt to write a revocable trust so as to avoid it. Below is a table which details the fee that the attorney can collect for estates valued up to $1M. As can be inferred, the cost of probate is directly proportional to the size of the estate. The larger the estate, the higher the fee and vice-versa.
The table below is for ordinary compensation. If the attorney performs services beyond which is expected of them, they may petition for extraordinary compensation. This fee is not set by statute. Rather it requires a declaration by the attorney, and his or her staff, which documents their hourly rate and the amount of time they expended on the matter. A common reason to petition for extraordinary compensation is if real property was sold during probate.
Estate Value Statutory
Fee
$100,000 $4,000
$200,000 $7,000
$300,000 $9,000
$400,000 $11,000
$500,000 $13,000
$600,000 $15,000
$700,000 $17,000
$800,000 $19,000
$900,000 $21,000
$1,000,000 $23,000
While probate fees can be seen as quite high, there are two notable aspects that should be mentioned when discussing probate fees.
1. Timing of payment of probate fees
Generally, the attorney collects the above fee when probate has concluded, i.e. following the order for final distribution. Hence, the fee is not collected when the proposed personal representative initially retains the attorney. In particular, it is violation of a California Rule of Court for the attorney to collect the statutory fee absent a court order.
Since probate usually takes months to complete, 9 months is a reasonable estimate, there is no immediacy to this probate fee. The attorney must wait patiently for probate to conclude. This is in stark contrast to the normal payment of attorney fees. Almost universally an attorney will ask for some payment, i.e. a retainer, before engaging a client's matter. Yet in probate, the attorney has to wait 9 months or so to be compensated.
2. Source of probate fees
Probate fees are an estate expense instead of a beneficiary's personal expense. For example, if the estate's sole asset, e.g. a bank account, was appraised at $400,000, the $11,000 statutory fee will be subtracted from that $400,000 figure. The fee will not be collected from the beneficiaries.
